Liability Insurance
We all live in the society where uncertainties are at its peak and none of us knows when a financial help is needed. For such an environment, insurance works as a safety jacket for protecting an insured from the various financial crisis that may arise anytime. There are different types of insurances available to safeguard one from health issues, home burglary, car accident or vehicle damage, etc. These are some of the most common insurance policies, but there are insurance policies that are specific in nature
These specific insurance policies provide coverage against certain issues and hence are not generic in nature like life insurance policy or insurance plan for health. One such special insurance policy is Liability Insurance policy.
An Overview of Liability Insurance:
Liability insurance is an insurance that provides protection to individual and/or business against risks that they may be held legally liable to. In simple words, if an insured is liable for the injury or damage to any third-party (can be property or person), the insurance company financially compensates those losses. Generally, a liability insurance policy offers cover for both legal payouts and legal costs for which the insured is held responsible for. However, the contractual liabilities and intentional damages are not covered by most of the liability insurance policies.
Why is Liability Insurance Needed?
The liability insurance policy is for the companies or individuals who held legally liable for the injuries or other issues. This type of insurance policy is most suitable for doctors, hospitals, or business owners. For example, if a product manufacturing company sells a product that does damage to other people or products, then this manufacturing company may be sued for the loss or damages caused by its product. However, if this manufacturing company is procuring a liability insurance policy, then the loss or legal costs will be covered by the insurer.
Liability insurance is covered under general insurance policies. The scope of liability insurance in India is defined by the Public Liability Act of 1991.
Types of Liability Insurance Policy:
There are different types of liability insurance policies available which are according to the requirement and line of work of the customers. Some of the common types of liability insurance are:
- Public Liability Insurance:This insurance policy of liability insurance is for those industries/companies that encounter trespassers and/or visitors in huge amount. In some countries, this insurance policy is mandatory. However, whether it is mandatory or not, it is suggested to take this insurance policy to avoid unnecessary financial risks. The shopping malls, clubs, theatres, and places where sports or adventurous events are held are advised to take this insurance policy.
- Employer Liability: This insurance policy is for the employers who want to cover the liabilities of employees who may get injured because of the job. Generally, this insurance policy is known as Business Liability Insurance.
- Product Liability: This liability insurance policy is compulsory in many countries. However, it is one of the most required policies especially for the companies that deal with or produce tobacco, chemical, food, medical products, recreational products, etc.
- Third-Party Liability: A third-party liability insurance policy is liability insurance for small industries or individuals who want cover against damages or losses caused by them to the third party. In third-party insurance, the insured is the first party, the insurance provider is the second party, and the injured or the company/person who is making claim on the insured is referred to as third-party.
How is the Premium Amount of a Liability Insurance Policy Decided?
The insurance company takes different factors into consideration before deciding the premium amount for a liability insurance policy taken by an individual or a company. The first and the foremost factor that affects the premium of a policy is the amount of the risk that the products of the company or a company come up with. Higher the risk, higher would be the premium amount to be paid.
Other factors that are being considered by an insurance company include- the claim history of the insured, approach of the company towards the risk, and the business record of the company.
Companies Offering Liability Insurance Policy are:
There are a number of insurance providers that offer various forms of liability insurance policies in India, some of them are
Liability Insurance Provider | Basic Inclusion |
HDFC ERGO Commercial General Liability | Offers liability insurance policies that provide protection for bodily injuries or property damage for which the insured is liable. |
TATA AIG | Provides protection against third-party liabilities occurred because of business operations. |
Bharti AXA Commercial General Liability Policy | Provides cover against liabilities that occurred because of the business operations or processes. |
Claim Process of Liability Insurance
There is no generic claim process for liability insurance as it depends on the insurance provider and hence it varies from company to company. Generally, in most of the insurance claims, a claim form (duly filled) with all the required documents has to be submitted to the insurance provider. However, for liability claims, this process is not simple. There can be court cases or out of the court settlements. Therefore, the process of claim definitely is different according to the claims that are made.
Why Policy Bazaar?
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